Tue 05/10/2022 13:55 PM
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Relevant Documents:
Notice of Event of Default (May 9)
2022 Budget (May 2)
2021 Operating Data (May 2)
2021 Unaudited Financial Statements (May 2)
2020 Audited Financial Statements (April 30, 2021)
Issue Details
Official Statement

University Bridge - a 20-story, 886-unit, 1,244-bed residential tower housing students, faculty and staff of Florida International University in Sweetwater, Fla. - has defaulted on $225.5 million in Series 2018 bonds outstanding, according to a notice of default posted to EMMA by bond trustee Regions Bank on Monday, May 9, and year-end financials posted by the company on May 2. University Bridge ended 2021 with a debt service coverage ratio of 0.87x, lower than the 1x event of default threshold in its bond documents, according to the filings.

Regions Bank says that the borrower will retain a management consultant to prepare a report in compliance with the bond documents. Regions Bank will not take any action pertaining to the event of default but “may do so at its discretion or upon the written request of” a majority of bondholders and receipt of an adequate indemnity, its notice states.

University Bridge’s 2021 operating report says that its default “is a direct result of the COVID-19 pandemic.” The FIU campus was shut down from January through July in 2021, resulting in bad debt expenses that were “significantly higher due to many no shows and non-paying residents.” For the 2021-’22 school year (that is, starting in August 2021), rental rates were increased only a little or not at all, but the borrower “significantly” increased concessions to incentivize students to sign leases because of the continuing uncertainty, the operating report says.

The operating report notes that because Florida International University has a large international student population, revenue collections “were even further negatively impacted by COVID-19 during 2020 and 2021.” The company’s student housing agreement requires that its property be operated exclusively as a residential living-learning facility for full-time undergraduate and graduate students enrolled at FIU, the report says.

University Bridge’s 2022 budget projects a DSCR of 1.05x. However, based on 2022 activity to date, the company has been able to increase rental revenue by removing concessions more aggressively than anticipated, and it says that it therefore expects 2022 DSCR “to be more favorable than originally budgeted.”

University Bridge says that the issuance of its 2021 audited financial statements “is pending response from the Trustee in order for the appropriate disclosures to be incorporated.”

The 2021 unaudited financials disclose that University Bridge has $15.1 million in debt service reserves and another $2.7 million in various other reserve accounts held by the trustee. The company reports $218.7 million tax-exempt bond notes payable, $4.6 million taxable bond notes payable and another $2.2 million in current portion of bond notes payable.

In 2018, the Capital Trust Agency issued $227.6 million in bonds, comprising a $218.7 million tax-exempt Series 2018A bond issue and a $8.9 million taxable Series 2018B bond issue. The proceeds were used to finance the acquisition, development and construction of University Bridge. The bonds are secured by a first mortgage, assignment of rents, security agreement and fixture filing.
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